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Chapter_01_2spp - Microeconomics Chapter 1 Introduction...

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glyph3 Microeconomics Chapter 1 Introduction glyph4 What is microeconomics? glyph2 Economics = the study of how people and societies deal with scarcity glyph2 Microeconomics = the branch of economics focusing on the economic behavior of individual decision-making units and how these individual decisions fit together
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glyph5 The three questions in (micro)economics 1. What to produce? glyph2 opportunity cost = what is given up in order to obtain something 2. How to produce it? glyph2 allocation of resources 3. Who gets the output? glyph2 allocation of resources glyph2 centrally planned economies vs. market system glyph6 Economic analysis glyph2 Models = a simplified description of some aspect of the economy glyph2 used to answer specific questions based on some simplifying assumptions glyph2 Two types of analysis/statements: glyph2 normative = descriptive statements (cause and effect) glyph2 positive = value judgments
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glyph7 Microeconomic foundations glyph2 How consumers choose what to consume glyph2 How firms choose how much to produce glyph2 How firms choose the amount of labor and capital to use glyph2 How do these actions coincide to bring about a market outcome glyph8 behind the demand curve behind the supply curve Consumer theory General equilibrium Producer theory Microeconomic foundations
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